AuthBridge Newsletter Vol VIII Issue 12


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It is now a year since AuthBridge re-launched its monthly corporate newsletter to share its experience and knowledge attained over the eight years of being in this profession. With every issue we have strived to keep you clued on all the
national and global happenings in and around the screening industry.
In our twelfth issue, we continue discussing the screening trends, best practices
in screening and a point to ponder apart from this month’s trending news. We track the overall age-wise discrepancy in our ‘Screening Trends’ section while the ‘Best Practices in Screening’ section discusses the disposal of checks. The
‘Point to Ponder’ section debates over the ways to arrest corporate frauds.

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AuthBridge Newsletter Vol VIII Issue 12

  1. 1. Editorial It is now a year since AuthBridge re-launched its monthly corporate newsletter to share its experience and knowledge attained over the eight years of being in this profession. With every issue we have strived to keep you clued on all the national and global happenings in and around the screening industry. In our twelfth issue, we continue discussing the screening trends, best practices in screening and a point to ponder apart from this month’s trending news. We track the overall age-wise discrepancy in our ‘Screening Trends’ section while the ‘Best Practices in Screening’ section discusses the disposal of checks. The ‘Point to Ponder’ section debates over the ways to arrest corporate frauds. In the news section, we talk about the arrest of a wanted hacker from his rented accommodation in Pune for being part of the biggest international hacking network, prosecution of defaulting companies by SFIO, an 800cr. Loan mistakenly disbursed by UBI, and about arrest of BitInstant head as part of the recent most crackdown on illicit use of digital currencies. Findings pertaining to the Pharma sector in India, which were released in the Annual Trend Report 2013, has been covered by the media. The story has been discussed in the ‘AuthBridge in News’ section. We hope you continue finding the read interesting! Contents  News  AuthBridge in News  Screening Trends  A Point to Ponder  Best Practices in Screening  Case Studies  Products and Services News Stirrings within the Nation CBI Arrests Most Wanted Hacker from his Rented Lair CBI officers arrested Amit Tiwari from his rented accommodation in Pune for being part of the biggest international hacking network. Tiwari had been living as a tenant at a lavish bungalow owned by Xaahhabbi Kokoty since 2.5 years. He lived with his fiancée of which the owner was not aware. The owner stated that Tiwari was otherwise well-behaved person and used to pay rent on time Kapil Kokoty, Xaahhabbi’s father, said, "We made a mistake by renting the place to Tiwari. We are consulting our lawyer to evict him from the bungalow.” Kokoty added that all Tiwari had told them was that he was into a computer business. Kokoty admitted that Tiwari’s details were not furnished to Pune police. Housing society officials also said that Kokoty had not provided any information of his tenant nor the copy of Tiwari’s leave and license agreement.
  2. 2. SFIO Prosecutes 8 Defaulting Companies Serious Fraud Investigation Office (SFIO), a part of Corporate Affairs Ministry, has filed prosecutions against 8 defaulting companies and 5 errant directors. SFIO can register cases against directors only under Sections 235, 237 and 239 of the Companies Act 1956 as and when entrusted by the Indian government. The companies have been prosecuted under Companies Act as well as Indian Penal Code. The companies are Goldquest International Pvt Ltd, Global Trust Bank, Questnet Enterprises India Pvt Ltd, Palamoor Agro Complex Ltd, Jayant Vitamins Ltd, Yusuf Properties Pvt Ltd, City Limouzines (India) Ltd, and Ayushi Buildestates Pvt Ltd. Out of these, Questnet Enterprises India and Goldquest International are suspected to be associated with multi-level marketing company QNet that is under Economic Offences Wing’ scanner. UBI Disburses 800Cr. Loan sans Verified Collateral United Bank of India, a government-owned bank, has possibly disbursed Rs.800 crore at one of its branches in New Delhi without ascertaining collateral. The branch under scrutiny has allegedly sanctioned lines of credit totaling Rs.800 crore to around 150 accounts against bills that were discounted without any verification of the underlying physical goods. Outstanding loan on the accounts in question valued to about Rs.300 crore. "These are accommodation loans. Bills were generated without any exchange of goods", said a bank official in Kolkata. Accommodation loans are typically provided without verifying the borrower's credentials. Global Ripples BitInstant Head Arrested on Money Laundering Charges In the recent most crackdown on illicit use of digital currencies, Federal government has arrested one of the top individuals in the bitcoin community. Charlie Shrem, chief executive of digital currency exchange BitInstant, along with Robert M. Faiella of Cape Coral, Florida, have been accused for laundering money through a notorious drug-trafficking website. Shrem, also the vice chairman of a nonprofit group for promoting digital currency, Bitcoin Foundation, and Faiella have been charged for selling bitcoins worth of over $1 million to persons who try buying and selling drugs on now closed Silk Road website. When received bitcoin orders, Faiella would allegedly fill and sell them through this underground bitcoin exchange for a profit. 24-year-old Shrem and 52-year-old Faiella were each charged with one count of operating an unlicensed money transmitting business and one count of indulging in money laundering. They have also been accused of eluding regulations in order to keep criminal proceeds out of the financial system.
  3. 3. Screening Trends As already mentioned in our previous issues, about 18 out of 100 job candidates had provided discrepant information in the year 2012-13. Age-wise analysis of the discrepant cases revealed that 26.34% of candidates with discrepant background fell in the age bracket of 30-39 years. This is followed by 22.02% and 19.13% of discrepant candidates falling in the bracket of 40-49 years and 25-29 years, respectively. Lowest number of discrepant cases has been seen in the age bracket of less than 20 years. AuthBridge in News 35% Job Applicants in The Pharma Industry Lie: AuthBridge As per the recent Annual Trend report published by AuthBridge, out of every 100 job candidates in the clinical trial and pharmaceutical sector, 35 are found to provide falsified information either by furnishing incorrect educational details or even creating fake companies for its sake. The 35% discrepancy rate is the highest shown by any industry sector. "While the overall discrepancy across all sectors put together has remained consistent at around the 17-24% range, for pharma the discrepancy has stayed consistently at 34-39% range," said Ajay Trehan, founder and CEO, AuthBridge. The report is a compilation of results of discrepancy trend analysis conducted on the data of 500+ companies for the last three years. Other than pharma/clinical trials, the manufacturing and hospitality/airlines sectors have shown high employee discrepancies while management consulting, BPO/IT and financial services sectors have the lowest. A distinguished trend observed in the pharma sector is of creating fake companies in order to enhance work experience. This trend is quite common among the age groups of 30-39 years and 40-49 years. "In these age groups, an applicant doesn't mind enriching his or her educational qualification because at that level, what companies are looking for is an experienced candidate," said Trehan.
  4. 4. A Point to Ponder Arresting Corporate Frauds- Is there a Definite Solution? “Fraud and misconduct remain constant threats which, coupled with the dynamic and volatile business environment, and increase in business and technological complexities, create a significant risk of fraud. Organisations need to comprehend that the fallout from fraud and misconduct can be significant, including punitive damages, tarnished corporate and brand image, lost revenue, plummeting shareholder value and inability to attract and retain human capital.” - Business Line Confession to a $1.5 billion manipulation by B. Ramalinga Raju of Satyam Computer Services Ltd made India Inc. wake up to the fact that corporate frauds are on a rise both in terms of number and magnitude. It’s pretty much possible that almost every other company in India has at some point been a victim of fraud committed by an employee of any hierarchical level. Typically, the victimized corporate have resorted to measures like the two below.  Dismissing the guilty from services - This ‘quick-fix’ solution raises the possibility of similar crimes committed by these individuals in the companies where they are subsequently employed.  Civil litigation or public prosecution - Such sanctions may deter fraud, but only a handful of companies are prepared to make such matters public and, thus, risk harming their reputation. As a preventive measure, The Companies Act, 2013, requires organisations to implement a fraud risk framework and vigilance mechanism to keep a tab on in-house frauds. Does the buck stop here? Can it alone do away with the possibility of frauds? Background verification of employees helps in screening out the ones with any detail that is undesirable to the employer. Verification can be done prior to and post the employment stage, as well as can be done once or on an ongoing basis. If an organisation decides to deploy it, background screening can be conducted the way it best suits the organisation and its processes. Where do organisations place their bets on- Prevention or Cure? Can your organisation ensure effectiveness in hiring process sans background screening? Best Practices in Screening Categorisation of discrepancy Once verification is completed, each check would have a disposition or a final outcome which may not always be as distinct as a ‘clear’ or a ‘discrepant’. Database checks are easiest to dispose as the final outcome there would either be a ‘match found’ which is Discrepant or a ‘no match found’ which is Clear. In cases where there is a ‘partial match found’ further investigation is needed to dispose it finally. Similarly for checks like Substance Abuse, or Police Record disposing the checks as Discrepant or Clear is distinct and not dependent on interpretation. Address checks have some complexity as ‘shifted’ or ‘address could not be located’ or ‘house found locked after two attempts’ need organizational decision. ‘Shifted’, can be clear if on date of submission of address details, person was still residing. These ambiguities are typically marked ‘orange’ or as ‘minor discrepant’. Education checks have minimal complexity as far as ‘completion of the course’ verification is concerned. ‘Validity of the course’ as in is it approved by AICTE, for instance, or if the affiliation to the University is genuine and valid is where there is some complexity and again depends on the organization to declare it ‘clear’ or ‘discrepant'.
  5. 5. The most complex to dispose are the employment checks. One, there are multiple points of validation. Is the Company genuine? Does the company exist? Did the employee work there? Is the tenure accurate? Is the designation as claimed? Second, the response-time of the verification source, in this case the HR. Third, the brevity or organizational rules of response. And finally, when a company cannot be found on desktop research and a field visit is conducted to be told that either the company has shut down or the company has shifted and the new address is unknown, disposing these checks have multiple points of decision and hence are subjective and ambiguous. Clearly defined severity for possible dispositions is important to make the screening process smooth. While there is a possibility of defining the disposition under multiple severity types, the Best Practice is to keep it to Clear & Discrepant. However, given the Indian scenario, a third severity of a Minor Discrepant or Orange can be introduced, which are ‘Waiver’ or ‘Attention Required’ cases. This third category needs constant review and the dispositions occurring commonly should finally be organizationally determined as either a clear or discrepant. As a ‘knowledge partner’ to our clients, AuthBridge does recommend a standard severity grid. However many organisations have their own criteria. Once finalized, companies in consultation with their screening partners should do an Annual Review of the severity grid and its effectiveness and impact on the screening process. Case Studies Impact of Verification of Certificates During Initial Stages More than 14,000 students from various institutes recently applied for MP Board of Secondary Education (MPBSE) higher secondary exam. Of 200 applications from MP Open School, 150 were found fake. Of the 2,000 applications from Maharishi Patanjali Sanskrit Institute, 275 were found fake… Most of these students are from Gwalior and Rewa divisions of the state… MPBSE is now preparing a list of students who submitted fake mark-sheets. The board is also likely to take legal action against them. -The Times of India|Gurgaon In the above case, MP Board conducted verification of the mark-sheets before letting the applicant appear for the board exams. This is a classic example of how certificate verification at such initial stages can spare employers the pain of making hires based on fake educational background. But does verification conducted by education boards mean lesser checks for companies? Competency for a given job role is often ascertained with the help of educational qualifications and work experience. While work experience is often sufficed with the company’s experience letter and offer letter, the educational qualifications are embodied by degree/diploma certificates and mark-sheets. Verification of documents by educational authorities is a good practice but may not be a substitute to education verification conducted by companies. The verification conducted by companies involves sending not just few specific certificates but all of them to corresponding boards/universities for validation. Extending verification beyond just that of educational background helps employers attain a clearer picture with regard to two aspects:  Authenticity of details provided by the candidate such as past employment history, address; and  Check into databases like criminal and other negative records Look into every such aspect would mean a complete verification which will definitely lead to more sound hiring decision.
  6. 6. Products & Services AuthNumber® Organisations across industries and geographies need to respond to the employee verification requests as a result of which companies become susceptible to the risks of losing track of responses they have sent out. An internal collusion can result in potential security threat to a large extent. AuthNumber®, a highly secure database management application by AuthBridge, helps employers manage responses to external verification requests in a manner which ensures a controlled and appropriate access to information. AuthNumber® integrates with the client's HRMS or external verification applications seamlessly which facilitates the efficient management of verification response processing. The application makes sure that the HR professionals are able to allocate their valuable time on activities which are more important. AuthLead™ Handling of highly sensitive and critical information, wielding the authority to take strategic decisions, sitting at a vantage point with a clear bird's eye view of the processes, all these come as part and parcel of being at the top of the hierarchical ladder. An extensive background check to bring in the right leader is, hence, the need of the hour. AuthLead™, brought to you by AuthBridge, is a detailed Due Diligence on the prospective candidate with extreme attention to research and analysis based on market intelligence. Mapping the prospective leader's ecosystem in every organisation and cross-verifying details is one of the most basic steps in the process. AuthLead™ also helps ensure that the leaders come out clean if they are subjected to FCPA, UK Bribery Act, Indian Prevention of Money Laundering Act etc. related due diligence at any later stage. The verification and Due Diligence process during AuthLead™ goes on till an experienced team of analysts is reasonably confident that most critical aspects have been adequately researched and that there is nothing more to look for. Vendor Due Diligence An organisation operates in an eco system wherein it needs to interact and collaborate with various entities, be it the employees or the other corporate. Employing human resource, collaborating with a corporate partner, investing in a business opportunity or roping in a vendor or franchise, everything involves risks. Due Diligence solutions from AuthBridge ensure that one does not stop at just confirming the authenticity of the entity but take a step further in order to ascertain its capability as well as its compliance history. Be it partner due diligence, vendor due diligence, franchise due diligence or investment risk due diligence, all the services strive towards bringing additional information to the client about the third party so that the client is in a position to take an informed decision. IndiaVerify™ Background verification services by AuthBridge are already helping corporates address the employee related risks. With IndiaVerify, AuthBridge strives to reach out to individual customers and pass on the benefits of background check to them. A retail product from AuthBridge, IndiaVerify™ addresses the verification requirements of individual customers for domestic helpers, drivers, tenants and marriage partner. Rise in the level of marital frauds and crimes committed by domestic helps, drivers and tenants, has heightened the need of a verification service of this nature. IndiaVerify™ eases the process of initiating verification for the individuals and helping them secure their personal and domestic environs.
  7. 7. AuthBridge Research Services Pvt. Ltd. Plot No. 123, II Floor, Udyog Vihar, Phase IV – Gurgaon – 122 016 Haryana, India Website:| E-mail: | Tel: +91 –8826988001